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Chen Zutao: There are more than 100 automobile manufacturers in China appear normal
In today's Chinese auto market, the presence of over 100 automakers is still considered a common occurrence. This situation echoes the U.S. automotive landscape in the 1920s and 1930s, when hundreds of manufacturers once thrived. However, after decades of market evolution, only three major players remained: General Motors, Ford, and Chrysler. This historical parallel highlights a natural cycle in the industry—growth, competition, and eventual consolidation.
Among the well-known names in China’s auto sector today, it's increasingly difficult to find seasoned leaders like Chen Zutao, a pioneer who has shaped the industry for over half a century. Now 80 years old, Chen joined the Chinese auto industry in 1951 and played a key role in the development of FAW, BAIC, NAC, and FAW. He also served as chief engineer and general manager of the China Automotive Industry Corporation.
His career spans more than five decades, making him a living archive of China’s automotive history. Recently, the "First Financial Daily" interviewed him to gain insight into the past, present, and future of the industry. His reflections offer a rare and valuable perspective on how China’s auto sector evolved through challenges and breakthroughs.
One of the most pivotal moments in his career was the Santana project, which was approved by Deng Xiaoping. Back then, under the planned economy, even small decisions required approval from the Planning Commission. Chen recalls how the commission proposed reducing annual auto output from 220,000 units (mostly trucks) to 180,000. He strongly opposed this, arguing that China needed to grow its car production. At the time, some officials dismissed cars as a bourgeois luxury, but Chen challenged that notion by asking, “Why can’t people have their own cars?â€
Eventually, with the establishment of the China National Gas Corporation in 1983, things began to change. The Santana project was approved, and by 1984, the first assembled Santanas rolled off the production line. By the 1990s, the Chinese sedan market was dominated almost entirely by the Santana, a testament to the foresight of German Volkswagen at the time.
Chen also reflected on the rise of Japanese automakers in China. While Toyota and Nissan were not as strong in the early 1980s, they eventually entered the market. He recalls being invited to Japan but facing resistance due to his insistence on technology transfer. Japanese companies initially viewed China as a market rather than a partner, but over time, they had to adapt.
Today, Japanese cars have gained significant momentum in both global and local markets. Models like the Toyota Camry have become best-sellers, and the Guangzhou region has emerged as a hub for Japanese automakers. Chen believes that the success of Toyota, Honda, and Nissan has reshaped the industry landscape in China.
Looking ahead, Chen emphasizes the need for consolidation among China’s numerous automakers. With over 100 companies currently operating, he sees a similar pattern to the U.S. market of the 1920s and 1930s. He predicts that only 6 to 8 major players will remain in the long run. This reorganization will be essential to address issues such as capital, management, talent, and production efficiency.
Chen supports mergers and acquisitions, citing examples like Nanjing Automobile and SAIC Motor. He believes that strategic partnerships can help companies overcome technical and financial hurdles. In his view, the future of the Chinese auto industry depends on smart restructuring and a focus on innovation. Despite the growth, he remains concerned about the sustainability of the current market structure.